Arbitration

Arbitration is an out of court means of dispute resolution where the parties nominate impartial and independent arbitrators based on their expertise to rule on their dispute. It is mostly used in Business to Business disputes, Business to State disputes and State to State disputes.

Parties can provide for arbitration by including an arbitration clause in their contract, agreeing to arbitrate once the dispute arises or resorting to treaties enabling the arbitration of disputes (typically multilateral or bilateral investment treaties)

Arbitrating disputes in France

Arbitrating disputes in France

 

France is one of the most arbitration-friendly jurisdictions across the globe. Its arbitration case law is ancient, predictable and its statutory law was amended to make it more accessible.

Paris is home to both leading arbitration institutions and an elite arbitration community, which prove extremely valuable in the framing of arbitration proceedings.

Paris-based institutions such as the International Chamber of Commerce (the “ICC”) provide tailored guidance, up to date arbitration rules and logistical support for parties wishing to rely on this institution.

Proximity with a vibrant community allows to share best practices, know-how and get a good understanding of which professionals have the expertise, the experience and the availability to arbitrate disputes with the highest standards.

Deciding to arbitrate

Parties can decide to arbitrate a broad range of matters under French law, with limitations notably in the fields of:

  • criminal law
  • family law
  • insolvency law
  • consumer law
  • public law
  • labour law

French law does not impose any formal legal requirements for international arbitration agreements. However, it is preferable for the parties’ agreement to arbitrate a dispute to be clear to avoid any undue complications at the outset of the proceedings. It is therefore strongly recommended to put arbitration agreements in writing.

All the major arbitration institutions such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Swiss Arbitration Center (SCAI), the Stockholm Chamber of Commerce (SCC) or the Hong Kong International Arbitration Center (HKIAC) publish model arbitration clauses, which can be directly inserted in your contracts.

It is important to specify in arbitration agreements where the arbitration shall be seated as this will determine the law applicable to the procedural aspects of the arbitration. For example, if the parties choose Paris as the seat of the arbitration, French arbitration law will apply to the proceeding. Importantly, this does not mean French law will necessarily govern the contract and accordingly the merits of the dispute. The parties’ substantive obligations will be governed by the law they choose to be applicable to the contract.

Initiating an arbitration

A prerequisite to initiating arbitration proceedings is often observing a “cooling off” period. Respecting escalation clauses and mandatory settlement talks will avoid challenges to the admissibility of claims before the arbitral tribunal.

During a cooling off period, parties may however prepare for arbitration proceedings. This involves in particular the selection of counsel and the gathering of evidence. In order to help parties prepare their case, French law allows the filing of requests for evidence from the opposing party in domestic courts prior to the constitution of the arbitral tribunal (Article 145 of the Code of Civil Proceedings).

Arbitration proceedings can be triggered by the filing of a request for arbitration, which varies according to the institution which will administer the case as per the arbitration agreement (ICC, LCIA etc.). Usually, requests for arbitration will consist of a summary of the dispute, a high-level presentation of the claims, the relief sought and indications regarding the constitution of the tribunal (the appointment of an arbitrator if the dispute is to be heard by a tribunal of three for instance).

Constitution of the arbitral tribunal

Formation of an arbitral tribunal can prove challenging where an arbitration agreement is unclear or pathological (e.g. an arbitrator specifically identified in the clause passed away or the clause refers to an institution which does not exist) and does not provide for the support of an institution.

In order to circumvent potential difficulties, French law allows application for assistance from a specialised support judge. The support judge will have jurisdiction to hear matters relating to the formation of the tribunal with a view to ensuring arbitration proceedings are adequately initiated.

The support judge’s jurisdiction is however limited as French arbitration law is mindful of keeping domestic courts out of the arbitration process.

French law is particularly known for its extensive view of the arbitral tribunal’s jurisdiction to rule on its own jurisdiction (also known as “principe de compétence-compétence”), which preserves the integrity and autonomy of the arbitral process by avoiding dilatory tactics.

Framing the arbitration proceedings

Once the arbitral tribunal is constituted, the parties will be invited to define the arbitration’s procedural framework by attending a case management conference. The parties are given great leeway in the organisation of proceedings under French law (and most institutional rules), provided they act in line with due process.

The parties’ views are settled in a procedural order issued by the arbitral tribunal. Procedural orders can address a variety of matters; in particular the number and length of the submissions exchanged by the parties, the means of notification and communication throughout the proceedings, the language of the proceedings, the applicable law and the rules governing the production of documents and witness examinations. A procedural calendar is usually agreed upon at the same time.

The framing of the proceedings will have an important impact on the overall cost of the arbitration.

Defining the hearing format

Ahead of hearings, the parties will also be invited to agree on the envisaged length of the hearing, the number of witnesses they wish to examine, in what order and more general house-keeping issues (venue, court reporters etc.).

It is important to note that arbitration has immediately adapted to the pandemic by allowing virtual hearings and immediately providing the parties with the adequate guidelines to secure their rights and avoid unnecessary delays due to sanitary restrictions.

Award enforcement

France is a forum extremely favourable to the enforcement of arbitral awards. As a signatory to the 1958 New York Convention on the enforcement of arbitral awards, France only refuses to enforce foreign awards on limited grounds. Such grounds are listed at article 1520 of the Code of civil proceedings (applicable by reference to Articles 1524 and 1522) :

  • the arbitral tribunal wrongly upheld or declined jurisdiction;
  • the arbitral tribunal was not properly constituted;
  • the arbitral tribunal ruled without complying with the mandate conferred upon it;
  • the adversarial principle was violated;
  • recognition or enforcement of the award is contrary to international public policy.

In order to oversee enforcement and annulment of international arbitration awards, France has created a special division within the Paris Court of Appeals (the International Chamber of the Court of Appeal of Paris). Although the submissions are to be drafted in French, exhibits can be filed in English and party representatives, witnesses, experts can be heard in English if they so prefer. As concerns foreign lawyers they can plead in English only if they are authorised to plead at the Paris Court of Appeals.

Useful resources

A full translation to English of the French law on arbitration is available here.

You can follow Signature Litigation’s frequent arbitration news reports on LinkedIn and Twitter, as well as as our partner Flore Poloni’s LinkedIn account for updates. The arbitration team of Signature Litigation will be happy to be of assistance for any matters related to arbitration under French law.

Flore Poloni

Flore Poloni, Partner

Flore specialises in international commercial arbitration. She has significant experience representing international companies in mediation and arbitration proceedings.

Biography